tag:blogger.com,1999:blog-9208928.post4932404870113035837..comments2016-12-09T04:04:26.059-05:00Comments on Start Making Sense: A critique of Bain CapitalDaniel Shavirohttp://www.blogger.com/profile/14710628584922961682noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-9208928.post-35487494391788412792013-03-16T10:26:03.429-04:002013-03-16T10:26:03.429-04:00I would love to stop by. But, I think it might hav...I would love to stop by. But, I think it might have to wait until this summer. I did not know that Serlkay had ever expanded its size. I must say that a succesful family owned business in this day and age is a very refreshing sight! As well as this is a very refreshing site! <a href="http://www.onlinereputationsinc.com/" rel="nofollow">reputation management</a><br /><br />Claudio Timbershttp://www.blogger.com/profile/00880066121135513407noreply@blogger.comtag:blogger.com,1999:blog-9208928.post-37933738798468291672012-01-15T10:31:08.444-05:002012-01-15T10:31:08.444-05:00I feel as if this post touches on how my thinking ...I feel as if this post touches on how my thinking has developed in the last week or so.<br /><br />I don&#39;t think all private equity is bad. No doubt some if not most of these companies do play a role in the creative destruction process. However, it doesn&#39;t look like the same can be said about Bain Capital when he was involved. For me, it&#39;s far worse that he managed to stick the government with the bill for pension costs and whatever else while he still made a profit. At the same time, was anything else to be expected? As Felix Salmon said, &quot;The reality is that Romney would have been in violation of his fiduciary duty to his investors had he concentrated on creating jobs, rather than extracting as much money as he possibly could from the companies he bought.&quot; Perhaps the problem is more with the government that lets this sort of thing happen--not the milking of companies by itself, but the milking of companies with the government picking up the bill. <br /><br />If that&#39;s the sort of thing we want to stop, why would we want to put someone in charge who was directly involved with it and seems to have no desire to see the process change?Brian Jhttp://www.blogger.com/profile/00937471753899907686noreply@blogger.comtag:blogger.com,1999:blog-9208928.post-18240145622130837362012-01-14T16:51:16.789-05:002012-01-14T16:51:16.789-05:00The goal of an executive is never to improve the b...The goal of an executive is never to improve the business, it is to improve his or her personal wealth. Improving the business is generally a good means to that end, but it would be naive to assume that the good of the enterprise is the goal of any hired executive.<br /><br />Bain&#39;s strategy is neither new nor particularly brilliant: it used to be called the &quot;sausage game&quot;, from the textbook example: make great sausage, get a reputation, then slowly adulterate it, increasing profits. The goal is to sell the company at a huge markup before demand takes a dive.<br /><br />Romney himself cited his time at Bain as a qualification, and has called himself a &quot;job creator&quot;. It is reasonable to critique whether that is so. I think it likely that President Romney would revert to type: cooking the books and producing programs with short-term and/or illusory benefits but long-term problems.Robert Westhttp://www.blogger.com/profile/16830743573246446990noreply@blogger.comtag:blogger.com,1999:blog-9208928.post-42047259665587400572012-01-14T08:50:21.994-05:002012-01-14T08:50:21.994-05:00Agreed on all counts except perhaps your last para...Agreed on all counts except perhaps your last paragraph. Anything in one&#39;s career is potentially predictive of how one would perform as president. And the problem with predicting his performance from when he was the Massachusetts governor is that he will be facing very different political incentives. (If being a moderate Republican president was likely to pay off politically for him, my expectations would be very different.<br /><br />The whole public conversation about his private equity career has of course been very silly. But he started this whole thing, e.g., by implicitly suggesting that his buyouts make him qualified to judge, say, whether Keynesian stimulus can be effective.Daniel Shavirohttp://www.blogger.com/profile/14710628584922961682noreply@blogger.comtag:blogger.com,1999:blog-9208928.post-483587073500904012012-01-13T23:47:32.272-05:002012-01-13T23:47:32.272-05:00I take this as more a critique of public-prices-co...I take this as more a critique of public-prices-converge-to-true-value than of Romney.<br /><br />Many investors analyse a stock in such a way that the strategy you describe would raise the stock price. That public markets demand quarterly performance improvements is a common gripe.<br /><br />(Even more: the very fact that any p.e. firm could take a company off the market for a time and increase the stock price must defeat the EMH in one way or another.)<br /><br />But as far as Romney&#39;s behaviour goes: he did what was good for his business. He met the goals he was set toward. Bain Capital&#39;s mission was neither to create jobs nor to add economic value.<br /><br />I would just Romney&#39;s likely performance as President based on his observable performance as a Governor. As Governor his responsibilities were to the public, as they would be in a nationally commanding role.Lao Tzuhttp://www.blogger.com/profile/01010110666955169076noreply@blogger.com